Cutting sales taxes hasn’t grabbed the attention of Texas legislators looking at a record state surplus. But there are a couple of small consolation prizes in the works for consumers.
A bill that would give Texans a fourth sales tax holiday weekend — just as they’re thinking of buying holiday gifts — made it out of the Texas Senate finance committee. That committee on Wednesday received another sales tax relief bill, House Bill 300, which proposes to eliminate sales taxes on purchases of diapers and period products.
State Sen. Royce West, D-Dallas, is sponsoring Senate Bill 1000, which would exempt sales taxes on apparel and shoes priced at less than $200 on Oct. 13-15.
He wants to name it the “Budget Surplus sales tax holiday.” It could go to the floor of the Senate next week and then to the House, where it also has support, West said.
The price limit is twice that for exempt items during the state’s annual August back-to-school sales tax weekend and a nod to recent inflation. Sneakers that cost $95 last year might cost $105 or $115 this year, putting them just out of range for the back-to-school sales tax exemption.
Inflation was behind the thinking to set the proposed limit higher, said West.
“We also know it will bring out more people to shop, and some will spend on items that cost more than $200 bringing in more sales taxes,” he said.
The timing of a new exempt weekend matches up with retailer discounts and consumer spending that’s shifted holiday shopping from November and December into October in recent years.
Royce’s amended bill is a consolation. His original bill proposed an across-the-board decline in the state’s 6.25% sales tax to 5.75% as a way to give back to residents some of the state’s $33 billion surplus. It failed to get out of the Senate finance committee. Such a cut would save the average family of four about $400 per year, based on the Texas Comptroller’s Tax Incidence Report for 2023.
The total cost to the state was to be about $4 billion per year of the biennium, according to the Texas Taxpayers and Research Association. That group estimates that Texans pay the ninth highest sales tax of any state, and with the combined local tax rate, Texans pay the 14th highest in the nation.
“I will continue to make arguments for permanent sales tax cuts to our leadership including Governor [Greg] Abbott and Lt. Governor Dan Patrick,” West said.
It’s a tough tax to lower because sales taxes are the largest source of state revenue, West said. Sales tax revenue is expected to keep rising through at least 2028, according to projections from the Texas comptroller.
The new sales tax holiday was proposed as a one-time event unless it’s made permanent like the others.
“We’ll see how it goes,” he said.
Texas sales tax holidays
The big one is timed for back-to-school shopping in August saved shoppers more than $112 million in state and local sales taxes in 2022, according to the comptroller.
The Energy Star sales tax holiday is Memorial Day weekend as the hot summer calls for new air conditioners and ceiling fans. It also covers energy-efficient kitchen and laundry appliances.
Another sales tax holiday passed in 2015 for emergency supplies is this weekend.
Spring’s severe weather season is the catalyst behind this weekend’s sales tax holiday for emergency supplies. It starts at 12:01 a.m. Saturday, April 22, and ends at midnight on Monday, April 24.
There’s no limit on the number of batteries, fuel containers and flashlights priced less than $75. Also exempt from sales tax are hurricane shutters and emergency ladders priced less than $300 and portable generators under $3,000.